November 2012

Friday, November 30, 2012

Will disputes can be very messy, and oftentimes can delay important wishes laid out by the deceased. Take for example the case of the late Sherman Hemsley, as reported in a recent Forbes article titled “Court Ruling Finally Allows Body of Late Jefferson Star To ‘Move On Up’.” Hemsley’s remains rested on ice for three and a half months before he was finally put to rest.
Hemsley’s story is a troubling one, perhaps even more so because his estate was valued at only around $50,000. Sherman Hemsley, who played George Jefferson on the hit TV comedy “The Jeffersons,” didn’t have any real family, but he did have a close friend and business manager in Flora Enchiton whom he named in the will he drafted a mere six weeks before his passing. When a long-lost half-brother showed up to dispute the validity of Hemsley’s will and claim his right to direct the burial, the ensuing fight became both ugly and very public. In the end, Hemsley’s will prevailed, but not without a long fight.
Teaching points:
1. Even estates of relatively small value can bring out the worst in your relatives.
2. Proper estate planning can help ensure your wishes are carried out after your passing, even if some would choose to violate them.
3. Don’t procrastinate. The fact that Hemsley’s will was written a mere six weeks before his death did complicate matters. Had the will been signed long ago, before Hemsley was sick, it’s unlikely that the case would have taken so long to resolve.
This is another tough lesson on the importance of timely estate planning. Be sure to contact your estate attorney on a regular basis to ensure proper plans are made.

Thursday, November 29, 2012

A doctor’s note can sometimes be a golden ticket – the proof you need to obtain the care for your health needs. But what happens when those needs are denied by Medicare? Roughly 10 percent of all Medicare claims are denied, which can be defeating for those who are in need of care. But don’t fret; you have the right to fight for your coverage.
Reuters recently published an article explaining “How to appeal when Medicare won't pay.” It is not an uncomplicated process, but if Medicare refuses to pay for services your doctor recommends it’s certainly worth your while to fight. The numbers are fairly enlightening:
In 2010, 40 percent of Part A appeals and 53 percent of Part B appeals were granted, according to the Centers for Medicare & Medicaid Services, which administers Medicare (CMS). Even in the case of big ticket durable medical equipment appeals, 44 percent of appeals were successful. More than half of appeals to Medicare Advantage and prescription drug plans are successful, too.
Medicare consumer advocates offer these tips for filing an appeal:
1. Send a letter. Your paper trail starts with the summary notice of coverage you get in the mail. Take this notice, circle the erroneous denial, and write out why you think it should be covered. Make a copy, and mail one.
2. Don’t waste time. You have 120 days to file an appeal for Medicare Part B claims, and only 60 days for Medicare Advantage or Part D. If you filed for pre-approval and were denied, you have only 14 days to initiate your appeal.
3. Be persistent. You have a right to four levels of appeal, so don’t quit until you have exhausted all of your options.
4. Get help. For appeals beyond the first level, you may want to seek help from an elder law attorney.
If you have questions about your Medicare claims and rights to appeal, seek appropriate counsel to assist in the process.

Wednesday, November 28, 2012

The 4th quarter of 2012 is well on its way, and typically this is a time when non-profits bring in the most donations. Charities are feeling the full effect of the economic struggles we’ve been hit with in recent years, making this time a make-or-break giving season.
Why would this December be an especially trying time for charities? US News and World Report offered their own pithy list not too long ago and it’s worth a pause: “Nonprofits Face Challenging End-of-Year Giving Season.” Simply put, at a time when the services of charities have been needed more than ever (with hurricanes, droughts, and winter storms all taking their tolls during a sluggish economy) charitable giving has, understandably, been less than “generous.” That said, as a recent article published by the Chronicle of Philanthropy indicates, the “Average Gift by the Wealthy Has Declined Since 2009.”
If you’re inclined to contribute to a worthy cause before year’s end, you are well-advised to visit with your estate attorney or financial advisor about ways to best leverage your gift both for charitable and tax purposes. There are many strategies available that may make a larger gift more affordable than you think.
As we near the end of the 2012, lend your attention to your giving plans and make steps to get the ball rolling …before it drops in Times Square.

Tuesday, November 27, 2012

Entering into a second marriage (or more) results in what we call a blended family, because ultimately you are blending one family with another and a new dynamic is created. Blended families are very common in modern life, and with these new families come sticky planning situations for children from the prior marriage. If you and your family have come together in a different way, then it simply makes sense for you to plan in a different way.
Financial Advisor recently took up the issues facing a specific type of blended family – one created when a senior widower remarries. The role of the widower is statistically proven to be one of the most likely to give rise to challenging situations. More than 60 percent of men (compared to less than 20 percent of women) are involved in a new romance or remarried within two years of the passing of their first spouse.
What many fail to recognize is that a new set of legal arrangements automatically apply upon remarriage, the implications of which may conflict with previously agreed upon intentions. Proper estate planning can eliminate, or at least mitigate, these unintended consequences. Of course, as Financial Advisor states, the revocable trust “may be a widow’s best friend.” A trust arrangement can put legal muscle behind your intentions and ensure they are carried out as you plan.
If you or a loved one is entering into a blended family, consider protecting any assets and rights from the beginning. A revocable living trust is a great tool to use for your piece of mind as you create a new family dynamic.

Monday, November 26, 2012

As you may know, current law allows you gift a large sum of $5 million (more than $10 million for married couples) without triggering any gift taxes. Since the law is set to expire at the end of 2012, many are left guessing as to what will happen next year and gearing up for a very “gifted” 4th Quarter. But as you make plans to take advantage of the gift tax savings, have you carefully considered your own financial needs and goals?
From a tax planning standpoint, there may never be a better time for you to make a large gift. But, you know that life is about more than tax planning. The real question you need to answer, if you are inclined to make substantial gifts, is whether – and how much – you can afford to give. Wealth Strategies Journal recently published an article, “How Much Can You Gift,” to help you through the decision process.
Some things to consider:
• Your personal goals, especially for retirement. Will they still be adequate after your generous gift?
• Your age and health. Do you have many more income-producing years ahead, or is it possible you may need more money to provide for yourself and your spouse, especially if there are health issues to consider.
Consult the cited article for more gifting considerations. For example, you should not gift away – in any form – assets that are essential for your own financial needs. You can gift away assets to your children (or trusts for them) that you will never need. And don’t forget about estate planning tools that can help you make gifts that you may need, with “just in case” access if you do. Seek appropriate legal counsel for more information.

Sunday, November 25, 2012

So little time, yet so much to do! That seems to be the theme as we near the end of 2012. Hopefully Congress will get to work and hammer out a deal to avoid the “fiscal cliff” (and trigger another recession). Regardless, it certainly looks like 2013 still won’t be quite as advantageous as the current tax code. This especially is the case if you’re looking to make a major sale that will invoke capital gains taxation. Accordingly, you’d better get to work and get that sale completed before the ball drops in Times Square! For business owners considering the sale of their businesses, this advice includes you. In fact, you will be interested in a recent article in The Wall Street Journal titled “Looming Tax Hike Motivates Owners to Sell.” As you likely know, the first tsunami to hit will be the automatic relapse in the tax code to pre-Bush era days, with an effective increase in capital gains taxation from a current 15% to a less advantageous 20%. And it gets worse: the Affordable Care Act (Obamacare) tacks on an extra 3.8% to capital gains that also goes into effect next year. Bottom line: capital gains will increase to 23.8% (that’s an increase of almost 60%!). It’s yet to be seen what the lame-duck Congress will do with their time or how they’ll solve this problem. But it seems unlikely that Obamacare and that extra 3.8 % surcharge is going anywhere. That alone is enough to encourage some business owners to advance their sale dates to 2012. It might already be too late to sell your business. Nevertheless, there may be time yet or other transfers besides. Looking for an example? Well it’s worth noting that George Lucas didn’t wait until January to sell his company, Lucasfilm, to Disney, potentially shaving $176 million off his would-be tax bill.

Saturday, November 24, 2012

Sometimes it’s not the thought of transferring our assets that first moves us toward proper planning, but the thought of preserving our assets long enough to be transferred. So does asset protection really work? And what exactly are you protecting your assets from? The topic of asset protection was picked up not too long ago over at the New York Times, specifically from the point of view of a lawsuit in the like-titled article “Safeguarding Your Assets Against the Hazards of a Lawsuit.” Up front it should be said that insurance can be your first line of defense, and there are as many types of insurance as there are risks. This is a product where one person literally buys piece of mind (assuming you trust your broker) and pays another to accept their uncommon liabilities and costs in exchange for common payments. But insurance only does so much since it simply transfers liabilities without eliminating them, and it doesn’t work proactively on its own; you need to structure your assets. This is precisely the activity that generally runs under the banner of “estate planning,” but it’s important not to pigeonhole one or the other. Proper planning is an ongoing activity in life to further your life goals. If you have particular concerns or you’re prone to specific risks, asset protection planning for your estate can help ease your worries. You can learn a bit more from the original article, but in the end your individual circumstances and consequent risks will determine a suitable asset protection plan for you.

Friday, November 23, 2012

You may be surprised to hear that, on occasion, Congress will agree on something. Confused by the notion? The media likes to paint a different picture, and in many cases they are spot-on that Congress is up-in-arms about the law. Nonetheless, some interesting things come out of those silent agreements. For example, estate planners may be able to keep stock in “portability,” an estate tax provision that is likely to either survive year’s end or be resurrected in 2013. We’re still waiting for an official word, but by all accounts “Estate-Tax 'Portability' [is] Likely to Stay” (The Wall Street Journal). As regular readers know, the concept of portability came out of budget deals two years ago and is one more provision set to expire as part of the so-called “fiscal cliff.” Portability allows married partners, who already enjoy special rights to exchange wealth between themselves tax-free at the passing of the first, to pass on their unified estate/gift tax exemptions too. Without portability, a surviving spouse may be required to pay estate taxes on the couple’s combined estate value, if the first spouse to die did not properly apply their exemption. A marital trust was the usual strategy employed to break this vicious predicament. Under current law, though, the exemption is now portable (so long as the estate tax return is filed on the passing of the first to die); so the surviving spouse can apply both exemptions to the final estate. It’s a powerful strategy. Under current law, this means that a surviving spouse can pass a whopping $10.2 million in estate value to their heirs, estate-tax-free. The end of the year could bring about the expiration of both the generous estate tax exemption and portability itself. Though experts predict that portability is here to stay, no one really knows what Congress will decide.

Thursday, November 22, 2012

Sometimes it’s not the thought of transferring our assets that first moves us toward proper planning, but the thought of preserving our assets long enough to be transferred. So does asset protection really work? And what exactly are you protecting your assets from? The topic of asset protection was picked up not too long ago over at the New York Times, specifically from the point of view of a lawsuit in the like-titled article “Safeguarding Your Assets Against the Hazards of a Lawsuit.” Up front it should be said that insurance can be your first line of defense, and there are as many types of insurance as there are risks. This is a product where one person literally buys piece of mind (assuming you trust your broker) and pays another to accept their uncommon liabilities and costs in exchange for common payments. But insurance only does so much since it simply transfers liabilities without eliminating them, and it doesn’t work proactively on its own; you need to structure your assets. This is precisely the activity that generally runs under the banner of “estate planning,” but it’s important not to pigeonhole one or the other. Proper planning is an ongoing activity in life to further your life goals. If you have particular concerns or you’re prone to specific risks, asset protection planning for your estate can help ease your worries. You can learn a bit more from the original article, but in the end your individual circumstances and consequent risks will determine a suitable asset protection plan for you.

Wednesday, November 21, 2012

With the election now over, gay marriage advocates see something entirely new across the states. As you probably know, three new states approved same sex marriage: Maine, Maryland, and Washington. What do these new developments mean for same-sex couples and their estate planning challenges? With the three newest states to uphold same-sex marriage, that makes an official total of nine states plus the District of Columbia, plus an assortment of 12 other states with various forms of “civil unions” and “domestic partnerships.” It’s a good sign for advocates, but all the same it’s important to remain in perspective, as put by Forbes staffer Deborah Jacobs not too long after the election: “Gay Marriage Scores Victories In All Four States That Considered It, But Tough Road Lies Ahead.” For planners, being able to take care of one another and your family, either with legal rights or transfers of assets, is a matter of balancing the right legal appointments, documents, and tax codes. But same-sex couples occupy a strange place that requires a steady hand: states vary greatly even when they permit same-sex marriage, the institution that opens up so many planning avenues, and yet the federal government doesn’t recognize any of them. As we watch the Supreme Court take on the Defense of Marriage Act (DOMA), there may be more new developments on the horizon. Whatever the outcome may be, same-sex couples still face unique and complex trials when it comes to their estate plans.

Tuesday, November 20, 2012

An important deadline is approaching – enrollment for Medicare Part D plans is underway and there are only a couple weeks left to pick the plan that suits you. Your selection needs to be made by December 7th. Just make sure you choose wisely as there are big changes happening to many popular plans. Here is a sobering statistic pulled by a posting over at the New Old Age blog on the New York Times: “only 5.2 percent of Medicare Part D beneficiaries manage to choose the most economical plan” (see “Part D, Part 2”). And why would that be? The market shifts greatly from year to year and providers frequently hide the gritty details with broad promises, but it’s those very details that determine your day-to-day life and much of your finances. For a short list of things to watch for and a broader view on comparing plans it may be helpful to review another article, “Avoid A Costly Medicare Part D Mistake Right Now” through Forbes. The big things to watch? 1. Increased monthly premium. 2. Increased deductible amount. 3. Changes in what drugs the plans cover and how well they cover them. 4. Changes in the medications you take. 5. Your plan may no longer be offered. In this case if you do nothing you will be enrolled in another plan that may not be the best suited for you. As you ponder over which plan is best for your needs, remember that enrollment ends December 7th.

Monday, November 19, 2012

The holiday season is upon us! Turkey, pumpkin pie and all the trimmings are making their way to the family dinner table and guests are arriving to spend quality time with their loves ones. As you settle in with your family to express your thankful thoughts of the year, take the time to check in with your elderly loved ones to make sure they are supporting themselves and assess any care needs they may have. It’s an unfortunate burden of thought during the holidays, but that doesn’t mean it isn’t an important one to bear in mind: as written by the Wall Street Journal not too long ago, you’ve got to ask, is it “Time for Elder Care?” And then there’s the other half of it: you’ve got to observe, understand, and react in such a way as to truly help the situation. It’s easy to over-react when the well-being of your loved ones is at stake. Take the opportunity this holiday season to assess their needs and then, if something is amiss, work to find specific solutions. Your loved ones might not need full-time care, but perhaps a housekeeper or even gift cards for a few restaurant meals might help. If additional assistance is needed, assess the situation and look for the most appropriate benefits – local, state, veteran, or specific group benefits are important first steps – and be careful in your timing. Refer to the original article for more advice on this important topic. As you check in with your loves ones, make the most of your time with them and enjoy the wonderful holiday season ahead!

Sunday, November 18, 2012

Any victory, large or small, is worth celebrating. So when it was projected that the annual gift exclusion will increase from the current $13,000 to $14,000 per year per person in 2013, many people are thrilled to see this change in the tax code.
This increase has been a small victory heralded by the financial press, included in a recent CBS MoneyWatch article titled “Gift-tax limits to rise in 2013.”
Now, the extra $1,000 may not sound like much if you haven’t been making full use of your gift limits. Nevertheless, when it comes to tax advantage wealth transfers, every little bit helps.
In fact, annual giving to loved ones is a time-honored tradition and strategy. Every portion of your estate given removes that much from coming under the estate tax scythe at your death. Remember: beginning in 2013 you can transfer $14,000 per year per person, to as many persons as you see fit, without reducing your lifetime exclusion (currently $5.12 million, but we’ll see what comes of that in 2013).
In addition, these gifts don’t count as charitable gifts either, which are without limit and can provide significant tax deductions when done correctly. If you are looking for even more ways to maximize your wealth transfers through gifting, then consult the original article. For example, two very specific and useful suggestions are to make gifts to cover educational costs (i.e., tuition) or medical costs.
Gifting is a great way to transfer wealth to future generations, and any small victory (even a $1,000 increase in the annual gift exclusion) is worthy of attention and consideration.

Saturday, November 17, 2012

Technology has made the world we live in largely digital. So it should be said that our “online lives” need to be included in our estate plans. We have to remember that we aren’t only protecting our tangible assets, but also our digital ones. So, have you planned your estate to account for your “digital assets”? If you have not, then you are leaving a big estate mess for your loved ones to clean up. This was the subject of a recent Forbes article titled “You Just Locked Out Your Executor And Made Your Estate Planning A Monumental Hassle.” The original article offers an expansive look at all of the digital assets to consider, as well as many ways making your assets “digital” can be helpful. Here’s the most important warning from the article: to enable your beneficiaries and your executors to secure your digital assets and square away everything from bank accounts to twitter accounts, you must provide your passwords. Thereafter, the sky is the limit! If you are a tech-savvy, then likely you can think of new ways to make technology work for you. For example, there are new services that even allow you to store your living will online, providing easy access by your doctors. Furthermore, even simple data storage capabilities become meaningful when you realize that the entire family photo collection can be turned into something every family member can “hold” and view with pleasure on demand – once it’s digitized. Your digital well-being ought be secured just as much as your non-digital assets, so don’t forget to make proper plans and take advantage of the evolving technology.

Friday, November 16, 2012

If you think divorce is more of a younger generation problem, you are mistaken. Divorce happens at all ages and stages, and the children of divorced boomers are starting to encounter the challenges of caring for their elderly parents on separate levels. The evidence has been slowly coming in for a while, of course, but current articles have helped to publicly put the pieces together for us. For example, consider a recent article in Reuters titled “Double the trouble when divorced parents get old.” In broad strokes, marriage is and has been an important institution for us. Not only does it order our daily lives, but it organizes our longtime finances as well. On the other hand, divorced persons simply have to plan that much more for their own old age, especially when it comes to the question of living alone and perhaps shouldering medical care by yourself. More often than not, this actually is an issue for the adult children of divorced parents. After all, it’s already an era that calls for more and more care from children, but taking care of Mom and Dad is an entirely different concept when they are no longer together or there for each other. For divorced individuals, this is definitely something to consider in your planning for the future. For families, this is a real and necessary issue to address with your parents as they go through life changes.

Thursday, November 15, 2012

What would you consider are your favorite and most valuable assets? Maybe it’s your stocks, business, or real estate. For some, however, their favorite and most valuable assets may be the beautiful art hanging on their walls. If your art collection is important to you and your heirs, and truly valuable in and of itself, then it’s important to make proper plans to protect it. In life we tend to limit our risks through various forms of insurance. Accordingly, when it comes to your art, this issue was addressed in a recent Forbes article titled “Should Your Art Be Insured?” This is not an easy question to resolve in every instance. A previous article in Forbes explored another angle on personally-owned art. The article, titled “Is Art An Asset Or An Investment?,” added another take on the world of such art. Remember: the value of your “art” is really whatever someone would be willing to pay for it. You may have heard that when it comes to art, there is more to it than what meets the eye. A true statement indeed, and even more impactful when you consider the valuation and planning for the artful assets you cherish.

Wednesday, November 14, 2012

When it comes to structuring a business, you have many choices: LLCs, S Corps, C Corps, LPs, LLPs, etc. So how do you choose the best option? A golden rule for business is to do business the way your business is structured, and to structure your business entity in the way you need to be doing business! If you mix and match, it has an unfortunate tendency to create serious liabilities which often come with a fairly aggressive tax assessment. With liabilities and taxes in mind, consider reading a recent Forbes article titled “Beware Of Partnership Status Sneaking Up On Your Business Venture.” While this advice is nothing new, yet another tax court case has come down the pike to confirm this conventional wisdom. In the case a father and son operated a moderately large agricultural business. The father and son, however, each formed their own entities, worked together to do the work, split the income equally, but disproportionately split the expenses. The IRS determined that this juggling of the books didn’t compute, so the IRS slammed both father and son with the taxes that would have applied on a single “partnership.” You could say this was another case of “substance over form.” Teaching point: if there are two business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there should be only one entity, if such is an accurate reflection of how the work is being done. So, if your business dynamic is changing from what you first structured it to be, you may need to restructure it in order to reflect the current business model it has become.

Tuesday, November 13, 2012

When it comes to our children, we want to equally divide our time, love, and attention the best that we can. And when we think about our estate plans for our heirs, equal division may be the first thing that comes to mind. But it’s not always the best solution as not all heirs are created equal in terms of their needs. This subject was taken up by Business Insider in a recent article titled “Not Every Good Estate Plan Treats Its Heirs Equally.” Sometimes you can divide everything equally and everyone is happy. However, sometimes the “even-Steven” approach may not be the best approach in every situation. For example, the recipients may have very different needs, some may be more deserving than others, or the estate assets may not be subject to easy division. Have you ever marveled at how children who grew up under the same roof and eating at the same table can be so different? It can be as simple as the differences between two individuals: one adult child is wealthy while the other is a starving artist; one child is disabled or otherwise needs medical aid while the other is as healthy as a horse. Then, there are the other kinds of inequities. For example, one child has received financial help from you over the years while the other toughed it out. The list of differences can go on and on, but it’s worth a look at the selection pulled together in the original article before taking a good look at your own plans and family dynamics. Life can be complicated, and family can be complicated with it. When it comes to planning for your estate, you might need to proportion and tailor the inheritances responsibly. Be sure to seek competent legal counsel to help you plan for each unique child.

Monday, November 12, 2012

So little time, yet so much to do! That seems to be the theme as we near the end of 2012. Hopefully Congress will get to work and hammer out a deal to avoid the “fiscal cliff” (and trigger another recession). Regardless, it certainly looks like 2013 still won’t be quite as advantageous as the current tax code. This especially is the case if you’re looking to make a major sale that will invoke capital gains taxation. Accordingly, you’d better get to work and get that sale completed before the ball drops in Times Square! For business owners considering the sale of their businesses, this advice includes you. In fact, you will be interested in a recent article in The Wall Street Journal titled “Looming Tax Hike Motivates Owners to Sell.” As you likely know, the first tsunami to hit will be the automatic relapse in the tax code to pre-Bush era days, with an effective increase in capital gains taxation from a current 15% to a less advantageous 20%. And it gets worse: the Affordable Care Act (Obamacare) tacks on an extra 3.8% to capital gains that also goes into effect next year. Bottom line: capital gains will increase to 23.8% (that’s an increase of almost 60%!). It’s yet to be seen what the lame-duck Congress will do with their time or how they’ll solve this problem. But it seems unlikely that Obamacare and that extra 3.8 % surcharge is going anywhere. That alone is enough to encourage some business owners to advance their sale dates to 2012. It might already be too late to sell your business. Nevertheless, there may be time yet or other transfers besides. Looking for an example? Well it’s worth noting that George Lucas didn’t wait until January to sell his company, Lucasfilm, to Disney, potentially shaving $176 million off his would-be tax bill.

Sunday, November 11, 2012

As we approach the end of 2012, you may be wondering if the Bush-era tax laws will expire come 2013. Have you done everything to ensure your estate plan will be able to survive a tumble off the tax cliff? When it comes to the “default” 2013 estate tax, some 12.5% of U.S. households may come under the estate tax axe, according to new analysis by LIMRA. These numbers were picked up and reported by LifeHealthPRO and reported in its article titled, “LIMRA: More than 1 in 8 U.S. households may owe estate tax in 2013.” This change in the estate tax exemption limit scoops up a huge new group of taxpayers in its dragnet who otherwise might not have been subject to the estate tax axe. In fact, many in this new group of estate tax taxpayers have not previously found themselves at the top of the wealth pyramid. So, how is this possible? If (or when) we fall off the fiscal cliff, the IRS will be forced to apply 12-year-old laws, and with them a 12-year-old estate tax exemption and its estate tax rates. In other words, the estate tax exemption will revert to $1 million from the current $5.2 million, and a 55% maximum estate tax rate will replace the current 35% rate. Yes, that’s a quite a low blow. Remember, it’s not just your bank account that the IRS counts against your estate tax exemption, but all of your assets, to include your home and life insurance death benefits. Unfortunately, that’s just the tip of the tax iceberg. Not only is it absolutely vital to keep track of the law, but it is essential that you know the steps to take now to protect yourself and your loved ones in the event Congress and the White House fail to act.

Saturday, November 10, 2012

have on family harmony. Naming beneficiaries seems pretty straight forward, but there may come a time when you forget who you’ve selected on various accounts. Thankfully there are shortcuts around this issue, you just have to know when and where to take them. When it comes to proper estate planning, the shortcuts are the existing options you already have with insurances and retirement accounts that allow you to designate your beneficiaries on a simple beneficiary designation form. For many of us, the beneficiary form is the first practical experience we have with estate planning. For thoughtful and downright tactful tips for designating your beneficiaries designations, consider a recent article in Fox Business titled “Bulletproofing Your Beneficiaries.” When it comes to beneficiary designations, some of them are shortcuts and some of them are dead-ends, and still others can completely undo your estate plans if you simply forget about them. That noted, there are at least two key points to consider. The second point is the beneficiary designation must be coordinated with your overall estate plan to the right beneficiaries (or even a system of trusts) to eliminate probate and minimize taxes. The first point, and a source of immediate concern, is that you must know who all of your beneficiaries are on all your accounts at all times. If you don’t know all of your beneficiaries, is it time for a “beneficiary audit” of all your accounts? You may want to consider reworking those designations to meet your distribution goals and ensure that your plans will end up as you intended.

Friday, November 09, 2012

Any victory, large or small, is worth celebrating. So when it was projected that the annual gift exclusion will increase from the current $13,000 to $14,000 per year per person in 2013, many people are thrilled to see this change in the tax code.
This increase has been a small victory heralded by the financial press, included in a recent CBS MoneyWatch article titled “Gift-tax limits to rise in 2013.”
Now, the extra $1,000 may not sound like much if you haven’t been making full use of your gift limits. Nevertheless, when it comes to tax advantage wealth transfers, every little bit helps.
In fact, annual giving to loved ones is a time-honored tradition and strategy. Every portion of your estate given removes that much from coming under the estate tax scythe at your death. Remember: beginning in 2013 you can transfer $14,000 per year per person, to as many persons as you see fit, without reducing your lifetime exclusion (currently $5.12 million, but we’ll see what comes of that in 2013).
In addition, these gifts don’t count as charitable gifts either, which are without limit and can provide significant tax deductions when done correctly. If you are looking for even more ways to maximize your wealth transfers through gifting, then consult the original article. For example, two very specific and useful suggestions are to make gifts to cover educational costs (i.e., tuition) or medical costs.
Gifting is a great way to transfer wealth to future generations, and any small victory (even a $1,000 increase in the annual gift exclusion) is worthy of attention and consideration.

Thursday, November 08, 2012

Hurry up! No, wait! Well, which is it? It all depends on your giving strategy. If you want to take advantage of current charitable giving options you better “hurry up” and get those gifts lined out. But if you are apprehensive about a possible increase in your taxes for next year, you may decide it’s best to “wait” and set those gifts aside for 2013 deductions.
The rallying cry of “hurry up and wait” regarding charitable giving was sounded by Reuters in a recent article titled “Charitable giving in unclear tax times.” One reason for playing “wait and see” is that we are still in the dark when it comes to the tax implications 2013 will bring. In fact, that darkness may not lift until long after the election, especially with retroactive tax policies a possibility.
Nevertheless, giving is easy, as far as major financial moves go. So you can wait and see if some definitive answer pops up before year’s end. If 2013 will be a bad year tax-wise, and the gift can wait until 12:01 a.m. on New Year’s Day, then the deduction can do the most good to offset new taxation. But, on the other hand; you might not want to waste the giving opportunity this year, and a deduction for 2012, by that minute.
Unfortunately, your legal, financial and tax advisors likely do not have a crystal ball to help you make the call. So what will your giving strategy be for this year and beyond?

Wednesday, November 07, 2012

Sometimes it’s not the thought of transferring our assets that first moves us toward proper planning, but the thought of preserving our assets long enough to be transferred. So does asset protection really work? And what exactly are you protecting your assets from? The topic of asset protection was picked up not too long ago over at the New York Times, specifically from the point of view of a lawsuit in the like-titled article “Safeguarding Your Assets Against the Hazards of a Lawsuit.” Up front it should be said that insurance can be your first line of defense, and there are as many types of insurance as there are risks. This is a product where one person literally buys piece of mind (assuming you trust your broker) and pays another to accept their uncommon liabilities and costs in exchange for common payments. But insurance only does so much since it simply transfers liabilities without eliminating them, and it doesn’t work proactively on its own; you need to structure your assets. This is precisely the activity that generally runs under the banner of “estate planning,” but it’s important not to pigeonhole one or the other. Proper planning is an ongoing activity in life to further your life goals. If you have particular concerns or you’re prone to specific risks, asset protection planning for your estate can help ease your worries. You can learn a bit more from the original article, but in the end your individual circumstances and consequent risks will determine a suitable asset protection plan for you.

Tuesday, November 06, 2012

Trick-or-treaters have emptied the candy bowl, plans for pumpkin pie and turkey legs are underway, and soon we’ll all be singing Deck the Halls …for the end of 2012 is rapidly approaching. For many of us, 2013 may bring a potentially disastrous tax predicament, either the fiscal cliff itself or something else entirely.
When it comes to estate and gift taxes there are some actions you may want to take while it is still 2012. This matter was taken up in a recent Forbes article appropriately titled “Year-End Estate Tax Considerations -- TIME IS RUNNING OUT.”
Yes, time is running out on your ability to take advantage of more than a few powerful tax tips and tricks. In fact, this countdown clock has been ticking toward this very precipice since the final days of 2010. If you haven’t been carefully planning all along, then now’s the time to jump to it! What can be done is another question and, while it depends on your unique goals, the original article offers a few examples of your options before the buzzer sounds.
Another Forbes article titled “Major Estate Tax Change Looming - Don't Be A Last Minute Louie” points out rather directly how 2012 has been a year of waiting – of waiting for Congressional action, of waiting for an election to come and go, and of waiting for a settled law to base your planning around.
Instead of waiting, however, the best advice would seem to be to take action as best we can. So please don’t delay, schedule a consultation with your legal, financial and tax advisors ASAP.

Monday, November 05, 2012

You’ve decided to make a gift out of your estate to your heirs, but you are on the fence with completing the process. What if you need those funds in the coming years? This can be a justifiable apprehension, whether you have a little to give or a lot.
With the longer lifespans we now enjoy and the expensive healthcare costs we now face, one strategy is to use gifts to purchase life insurance as a gift for your heirs, and to do so with a trust arrangement known as a SLAT.
A SLAT, or “Spousal Lifetime Access Trust” enjoyed the spotlight in a recent WealthManagement.com article titled “SLATs and Life Insurance: Have Your Cake and Eat it Too.”
Now, knowing how to have your cake and eat it too can require a complex bit of planning. However, done right, such planning can be powerful. Problem: when life insurance is owned by an individual it ends up counting towards their estate value by virtue of such “incidents of ownership.” A Spousal Lifetime Access Trust that owns a life insurance policy (a tactic normally seen in traditional Irrevocable Life Insurance Trusts) will allow access on the part of your spouse during their lifetime while also funding the policy for your heirs. If this sounds too good to be true, then it just might be if all of the i’s and t’s are not dotted and crossed properly.
To learn more about this gifting strategy, seek appropriate counsel to ensure you know the whole process and can maintain peace of mind when it comes to giving to your loved ones.

Sunday, November 04, 2012

With hunting season now open, there is a different “hunt” that you may want to explore. Medicare enrollment is underway, and premiums are expected to rise. So should you hunt down a better plan?
You may need to draw on your survival skills for this hunt. All evidence points to some serious rate increases in Medicare prescription drug plans.
As you likely are aware, October 15 marks the first day of the enrollment period that extends until December 7. Nevertheless, if you haven’t read about the prescription drug increases elsewhere, a recent article in Reuters has reported that the potential increases may affect as many as 80% of all beneficiaries and even generate double digit rate increases for as many as 5.9 million beneficiaries, or 29% of all beneficiaries. Check out the article titled “As Medicare drug premiums soar, it's time to shop around.”
Don’t be afraid to hunt down the option that best fits your needs. Be sure to look beyond the standard big 10 plans, because eight of the top 10 are showing such increases. For instance, under the Humana Wal-Mart Preferred Rx increases will be somewhere between 10%-23% for various beneficiaries.

Saturday, November 03, 2012

In a time of political change and laws that may be shifting, the word is out on the annual gift tax exclusion. It has been projected to rise for the first time since 2009.
The Wall Street Journal broke the good news as early as it could, in a Q&A entitled “Expect Gift Limit to Rise Next Year.” First, a caveat: it’s not the present lifetime exclusion of $5.12 million you can expect to see increase, as the jury is still very much out on that one. Rather, it’s the annual gift tax exemption presently set at $13,000.
Currently, you can exclude $13,000 per person per year, before ever reducing your lifetime exemption amount. Good news: that amount is set to adjust up to $14,000.
We await official numbers, but they should arrive later in the year. If and when the annual gift exclusion increases, this will bring a welcome bump in your wealth transfer opportunities.
If nothing else, the attention given to this uptick in the annual gift exclusion also may offer a wake-up call to the power of annual giving. Just think of what you can do for each of your loved ones with an annual gift of $14,000.

Friday, November 02, 2012

Naming beneficiaries seems pretty straight forward, but there may come a time when you forget who you’ve selected on various accounts. Thankfully there are shortcuts around this issue, you just have to know when and where to take them. When it comes to proper estate planning, the shortcuts are the existing options you already have with insurances and retirement accounts that allow you to designate your beneficiaries on a simple beneficiary designation form. For many of us, the beneficiary form is the first practical experience we have with estate planning. For thoughtful and downright tactful tips for designating your beneficiaries designations, consider a recent article in Fox Business titled “Bulletproofing Your Beneficiaries.” When it comes to beneficiary designations, some of them are shortcuts and some of them are dead-ends, and still others can completely undo your estate plans if you simply forget about them. That noted, there are at least two key points to consider. The second point is the beneficiary designation must be coordinated with your overall estate plan to the right beneficiaries (or even a system of trusts) to eliminate probate and minimize taxes. The first point, and a source of immediate concern, is that you must know who all of your beneficiaries are on all your accounts at all times. If you don’t know all of your beneficiaries, is it time for a “beneficiary audit” of all your accounts? You may want to consider reworking those designations to meet your distribution goals and ensure that your plans will end up as you intended.

Thursday, November 01, 2012

The result of a nationwide class-action suit and an agreement from the administration may change the course of Medicare qualifications, which is hopeful news for those who previously had been left without coverage. As it stands, beneficiaries must show a probability of improvement before Medicare will approve therapy and skilled nursing care. Ditching this age-old practice could mean huge relief to those with chronic or long-term conditions. For a perspective on the proposed settlement, turn to a recent article in The New York Times titled “Settlement Eases Rules for Some Medicare Patients.” The Medicare board has had a longstanding practice to require a likelihood of medical or functional improvement before a beneficiary could receive coverage for skilled nursing or therapy services, whether institutional or home-based. That left many care recipients in a lurch. If this settlement goes through and becomes practice, then the requirement is no longer “improvement” but “maintenance.” Accordingly, Medicare will provide services if they are needed to “maintain the patient’s current condition or prevent or slow further deterioration.” Not only would this be beneficial for those who have chronic conditions such as Alzheimer’s and Parkinson’s disease, but also for the families who are financially overextended from providing care to their loved ones.